The ‘Texa-fication’ of America

In 1981 a book titled The Nine Nations of North America, written by Joel Garreau, suggested that North America could be divided into nine nations, which have distinct economic and cultural features. Arguing that national and state borders are largely artificial and irrelevant, Garreau’s nine “nations” — including Ecotopia, MexAmerica, Breadbasket, Dixie, The Foundry, New England, Quebec, The Empty Quarter and The Islands — provides a more accurate way of understanding North America.

This week, Tyler Cowen, an economist at George Mason University, penned a cover story in TIME magazine, titled “The United States of Texas: Why the Lone Star State is America’s Future,” where he argues America’s “new cowboys” are blazing a path for the nation to follow in the future. It’s no accident, claims Cowen, that three of the five fastest-growing cities in the U.S. are in the Lone Star State. Not only are Austin, Dallas and Houston booming, argues Cowen, but total migration to Texas from the other 49 states was 106,000 in 2012.

“To a lot of Americans, Texas feels like the future,” writes Cowen, author of “Average is Over,” a book about the widening gap between rich and poor. “And I would argue that more than any other state, Texas looks like the future as well — offering us a glimpse of what's to come for the country at large in the decades ahead. America is experiencing ever greater economic inequality and the thinning of its middle class; Texas is already one of our most unequal states. America's safety net is fraying under the weight of ballooning Social Security and Medicare costs; Texas' safety net was built frayed. Americans are seeking out a cheaper cost of living and a less regulated climate in which to do business; Texas has that in spades. And did we mention there's no state income tax?”

Among the policies Cowen proposes as we move into this future: looser building and zoning regulations (to radically reduce the price of housing across America), cheaper education (to allow workers to upgrade their skills), and a loosening of occupational licensing at the state and local level (to open up many more low-skill jobs).

Texas largely avoided the housing crash and the recession. One reason Texas dodged the housing bubble that did so much economic damage to Arizona, California, Florida, Nevada and other states was that the state’s liberal, market-oriented land use policies kept home prices in check. Additionally, a significant amount of affordable new housing was built in the Lone Star State. By contrast, places with highly restrictive land use laws — like California and Florida — saw home prices rise rapidly, preventing builders from supplying sufficient affordable housing.

A wide range of economists, from the left-leaning Nobel Laureate Paul Krugman to the conservative Hoover Institute’s Thomas Sowell, argue that more restrictive land use laws cause home prices to rise. Restrictive land use laws — deceptively promoted as “smart growth” laws — limit urban and suburban expansion, driving land prices up. These higher home prices get passed along to home buyers in higher housing costs.

“The lower house prices, along with a generally low cost of living — helped along by cheap labor, cheap produce and cheap gas (currently about $3 a gallon) — really matter when it comes to quality of life,” he writes. “Texas has a higher per capita income than California, adjusted for cost of living, and nearly catches up with New York by the same measure. Once you factor in state and local taxes, Texas pulls ahead of New York — by a wide margin.”